European nations have agreed to bail out
the help of the International Monetary Fund. Greece's economic
struggles, which hit a crisis point in recent months, have been a major test for
the European Union and Europe's shared currency. With the
interconnected economies struggling to maintain Greece's stake, some
pundits are wondering: Should Europe be having second thoughts about the euro?
- Bailout Reveals Euro Failures The U.K.
Spectator's Daniel Korski says the varied
economies are just too distinct. "It would be difficult to see how it
would be politically feasible for the French government to raise taxes
on its citizens and redistribute them to assist displaced Portuguese
fishermen. As we have seen with the German reaction to the Greek crisis,
transferring taxes inside the eurozone poses significant problems. In
short, there were always serious doubts, according to economic theory,
as to how successful the euro could ever be."
- The 5 Countries
That Should Abandon Euro Portugal, Ireland, Italy, Greece and
Spain. Think-Tanker Mark Weisbrot writes in the
Huffington Post, "The problem is that they have a fixed - and for their
level of productivity - overvalued currency. For the PIIGS countries,
that is the euro. [...] If these countries had their own national
currencies, they could allow their currencies to depreciate. This would
give their economies a boost by making their exports more competitive
and reducing imports."
- Two European Currencies? The
Spectator's Daniel Korski doesn't
think European countries could ever revert back to one currency per
state. But what if Europe split itself between two European currencies?
"One way out of the problem may be the implementation of a two-currency EMU, with both currencies run by the
Frankfurt-based ECB. The Euro is so great, Europe may be lucky enough to
get two for the price of one."
- Why This Would Be a Disaster
The Guardian's George Irvin warns against
dropping the Euro. "Were the [Southern European] Club Med countries to
return to the drachma, peseta and escudo, the financial markets would
immediately send those currencies plunging. The response of member-state
governments would be to impose capital controls and erect trade
barriers, leading to a massive contraction in intra-eurozone trade and a
consequent fall in income and employment. Under normal circumstances
this would be bad enough, but under current conditions of world
recession such a fall in income would look much like what happened in
- Clearly, Europe Is Keeping Euro World Politics Review's Judah
Grunstein notes just how far member states are going to preserve the
Euro. "For Europhiles, the potential involvement of
the IMF is also seen as a symbollic defeat, sending the message that
Europe is not up to saving the euro on its own, as well as a strategic
one, in that once involved, the Washington-dominated institution would
have a de facto say in the budgetary decisions of an EU and euro-zone
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